MarketsMOJO Downgrades Ambika Cotton Mills to 'Sell' Due to Poor Growth and Bearish Trend

Ambika Cotton Mills, a microcap company in the textile industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 4, 2024. This decision was based on various factors, including poor long-term growth, flat results in the most recent quarter, and a technically bearish trend.
According to MarketsMOJO, Ambika Cotton Mills has shown a slow growth rate in net sales and operating profit over the last 5 years, with an annual growth rate of 4.70% and -0.31%, respectively. In addition, the company's interest and profit after tax for the last 9 months have also seen a decline of 48.71% and -22.92%, respectively. The return on capital employed (ROCE) for the first half of the year is also at its lowest at 11.09%.

From a technical standpoint, the stock is currently in a mildly bearish range, with the trend deteriorating from mildly bullish on November 4, 2024. Since then, the stock has generated a return of -2.46%. Multiple indicators, such as MACD, Bollinger Band, and KST, also suggest a bearish outlook for the stock.

Furthermore, with a return on equity (ROE) of 7.4, Ambika Cotton Mills is considered to have a very expensive valuation, with a price to book value of 1. The stock is currently trading at a discount compared to its historical valuations. However, despite generating a return of 2.52% in the past year, the company's profits have fallen by -32%.

Another concerning factor is that domestic mutual funds hold only 0% of the company, despite its size. This could indicate that they are not comfortable with the stock's price or the business itself. Additionally, Ambika Cotton Mills has underperformed the market in the last year, with a return of 2.52% compared to the market's (BSE 500) return of 31.79%.

On a positive note, the company has a low debt to equity ratio, averaging at 0 times. However, this may not be enough to outweigh the other factors that have led to the 'Sell' rating by MarketsMOJO. Investors should carefully consider these factors before making any decisions regarding Ambika Cotton Mills' stock.